chapter 3 Flashcards
(22 cards)
individual demand
the quantity of a commodity that a customer is willing and able to bye, at each possible price during a given period of time
market demand
the quantity of a commodity that all customer is willing and able to bye, at each possible price during a given period of time
determinants of individual demands
- price of the given commodity
- prices of related goods
- income of consumers
- taste and preferences of the consumer
- expectations od change in price in future
determinants of market demands
- size and component of population
- season and weather
- distribution of income
demand function
a statement which exits the relationship o=between quantity demanded for a particular commodity and factors influencing it
law of demand
the inverse relationship between the price and quantity demanded, keeping other factors constant
reasons of law of demand
- law of diminishing marginal utility
- substitution effect
- income effect
- additional customers
- different uses
exception of law of demand
- giffen goods
- status symbol goods
- fear of storage
- ignorance
- fashion-related goods
- necessitates of life
- change in weather
demand schedule
tabular presentation of various quantities of a commodity, that a customer is willing to purchase at different prices, during a given time period
demand curve
graphical representation of demand schedule
movement along demand curve
when the quantity demanded changes due to fall in price, keeping other factors constant
two types of movement
- expansion
- contraction
expansion in demand
a rise in the quantity demanded due to fall in price, keeping other factors constant
contraction in demand
a fall in the quantity demanded due to fall in price, keeping other factors constant
shift in demand curve
when the demand changes due to change in any factors other than the own price of the commodity
two types of shift in demand curve
- increase
- demand
increase in demand
a rise in demand of a commodity caused due to any other factor other than the own price of the commodity
decrease in demand
a rise in demand of a commodity caused due to any other factor other than the own price of the commodity
substitute goods
those goods which can be used in place of one another for satisfaction of a particular want
complementary goods
those goods which are used together to satisfy a want
normal goods
those goods whose demand rises with a rise in the income of consumer
inferior goods
those goods whose demand falls with a rise in the income of consumer
